A firm receives the largest profit from cheating on a cartel agreement when:
A) all members of the cartel cheat.
B) none of the other cartel members cheats.
C) all cartel members expand output.
D) its demand curve is more inelastic than other cartel members.

Question

Quizplus · Accepted Answer

When none of the other cartel members cheats, a firm can increase its output and capture a larger market share at the agreed-upon high price, maximizing its profit.

A Firm Receives the Largest Profit from Cheating on a Cartel